Business 7115 · O Level · Production of goods and services
Production of goods and services — practice question
SOLS manufactures 5 styles of luxury men’s shoes by using job production. SOLS works in a niche market. Quality assurance matters. All materials, including leather, are brought in from abroad. SOLS applies cost plus pricing. The shoes are sold straight to customers through its website. The Managing Director said: ‘We can sell our shoes for $100 less a pair than our competitors because we have no shops.’ Demand is growing and the Managing Director must decide whether to switch to batch production.
(a)[2]
What does the term ‘niche market’ mean?
(b)[2]
Identify two benefits to SOLS, apart from lower prices, of selling its products through a website.
(c)[4]
Explain, with reference to SOLS, how quality assurance differs from quality control.
(d)[6]
Identify and explain one benefit and one drawback to SOLS of cost plus pricing.
(e)[6]
Do you think SOLS ought to change its production method? Justify your response.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Extremely specialised” …